What is happening to food prices?

Page 1

WHAT IS HAPPEN II
by GAIL N. BROWN/National Director, AgribusinessS
Bacon $1.69 per lb., eggs 64 cents per doz., bread 38 cents per loaf, butter $1.01 per lb,, cheese $1.69 per lb. Food prices such as these, obtained on a recent visit to a San Fran-cisco supermarket, are worrying American consumers. But what has happened to food prices and what will happen to them in the next decade is also of increasing concern to businessmen and government officials. As the US popu-lation spends more of its disposable income for food, a smaller amount becomes available for such purchases as automobiles, clothing, furniture, travel, and entertain-ment. As a result, increasing food prices not only affect one's personal standard of living but also slow the eco-nomic growth of the nation.
Why Are Food Prices High?
In 1975, food prices increased approximately nine percent above 1974. This compares to increases of 14 percent in both 1974 and 1973. Expressed another way, the nation spent a record $180 billion for food in 1975, compared to $165 billion in 1974 and $144 billion in 1973, for a similar vol-ume. Some consumers still have not recovered from this blow to their pocketbook. Why? Because during the past three years such increases have been greater than the in-creases in personal disposable income (that is, income after federal, state, and local taxes). This is a change from the years prior to 1973, when the percentage of disposable income that consumers spent for food was decreasing year after year. At the end of World War II, for example, con-sumers were spending approximately 25 percent of their in-come for food. By 1960, this had decreased to 20 percent. The ratio of food expenditure to personal disposable in-come reached a low of 15.4 percent in 1972, increased to